Outliving Our Assets! Could This Happen To You?

What happens when we live longer than our money can support us?

January, 2007 – With Medical technology and increasing knowledge and innovations on treatment today, Canadians are living longer than any previous generation has. The challenge now isn’t just saving for a few years into retirement; it’s saving for the eventual costs of losing the standard activities of Daily living and long term care being provided.

Our savings habits, and financial knowledge aren’t keeping up to pace. According to Statistics Canada, Canadians currently, on average, live a lifestyle that costs more than 100 percent of the earned income, and Personal Savings is at an all time low. 60 percent of us will need some form of Care-giving from a family member or an institution as we age, and one in 3 of us will be struck by a critical illness and survive at least the first incident. Taking into account that the average size of an RRSP upon retirement in Canada is between 60,000 and 200,000, how long will our money last us?

Below are examples of one of the costs associated with old age.

The average monthly cost of long-term care facilities in Canada are*:

BC- $2,053.13 AB- $1,469.13 SK- $1,663.00 MB- $1961.88
ON- $2028.49 QC- $1,493.40 NB- $4045.42 NS- $2,266.05
PEI- $4,015.00 NL- $2,800.00
  • Are any of us prepared for an average of $48,000 in annual healthcare costs now, and more importantly when we retire, that more than 50% of Canadians will have to come up with?

None of us thinks it will happen to us, “It always happens to other people!”

So what do we do?

We need to grow, and change our thinking about Retirement and Old Age. We need to force our financial advisors to look at Critical Illness, Long Term Care and Independent Living Coverage for us and our families. Instead of paying for the eventual medical and non-medical expenses of Illnesses and Loss of the Activities of Daily Living dollar for dollar, these programs will provide the coverage for us for pennies on the dollar.

It’s interesting to observe that so many of us are overly optimistic about their future health and earning abilities, that we overlook the products and programs that are available to us right now in the financial planning process. We choose more often then not to simply make an RRSP contribution when we can, thinking that all that is necessary is to focus solely on Capital Accumulation in hopes that we can save enough money to cover everything that comes our way.

Let’s take our heads out of the sand and be smart about our future!

A few of the questions that we should be answering in our financial planning are:

  1. How do I protect my Number one Asset? (my ability to earn an income)
  2. What will my retirement look like? (how much annual income and desired lifestyle)
  3. Who will have my powers of attorney for my health and my finances?
  4. What happens when I have a Stroke, Heart Attack, or get Cancer and survive?
  5. Is there enough money in my portfolios to cover a healthcare facility for an extended period of time?
  6. How much does a healthcare facility cost?
  7. What happens financially when I die?

How do our current plans answer these questions?

The answer for most Canadians is that our money CAN last, but we have to change our thinking right NOW.

Timothy J. Simpson CIM
Sales Manager
Desjardins Financial Security Independent Network

About Desjardins Financial Security

Desjardins Financial Security is a component of Desjardins Group, the largest integrated cooperative financial group in Canada. Specialized in life and health insurance and retirement savings for individuals and groups, Desjardins Financial Security ensures the financial security of over 5 million Canadians from coast to coast every day. It employs 3,579 people and manages more than $18 billion in assets. The company has offices in a number of cities nation-wide including Vancouver, Calgary, Winnipeg, Toronto, Ottawa, Montreal, Quebec City, Levis and Halifax. http://www.dsf-dfs.com

NB: Sources of statistical information are from Statistics Canada, Heart and Stroke Foundation the Canadian Cancer Society and *Desjardins Financial Security